Holding Above $1,700/oz Ahead Of NFPs

Gold deals ~$3/oz softer to print ~$1,709/oz at writing, extending a move away from three-week highs established on Tuesday as the USD (DXY) and U.S. real yields have simultaneously unwound some of their recent declines.

• To recap, gold closed ~$4 lower on Thursday, having consolidated an earlier move lower despite weekly jobless claims printing above expectations, succumbing to an uptick in the DXY and U.S. real yields.
• Thursday’s deluge of Fedspeak was uniformly hawkish, with several speakers reiterating the Fed’s commitment to the inflation fight, and pushing back against the idea of a Fed pivot.
• Nov FOMC dated OIS now price in ~72bp of tightening at that meeting, operating at their highest levels for the week.
• Total known ETF holdings of gold are on track to decline for a 17th straight week, pointing to no let-up in weaker sentiment towards the yellow metal.
• From a technical perspective, gold has established a short-term bull cycle. Initial resistance is seen at ~$1,729.5 (Oct 4 high), with further resistance located at $1,735.1 (Sep 12 high and key resistance), while initial support is seen at $1,695.2 (former trendline resistance).